WASHINGTON (AP) Donating a car to a favorite charity can be a great way to help a good cause and secure a tax deduction. But the IRS warns that charities sometimes get far less from donated vehicles than taxpayers assume.
A survey by the General Accounting Office concluded that charities that employ car donation programs often get very little from donated cars. The vehicles are typically sold at wholesale prices and the proceeds split between the donation program and the charity.
''We encourage people to proceed carefully when donating vehicles,'' said IRS Commissioner Mark Everson. ''People should know that in some cases the donation is providing little value.''
The IRS advises taxpayers to take the following precautions:
- Make sure the organization is a qualified charity. Use IRS Publication 78, which is searchable online, to make sure the charity can receive tax-deductible contributions.
- Talk to the charity and find out how their donation program works and how much they will receive from a donated vehicle.
- Get a receipt or other documentation that the charity received your donated vehicle.
- Remember that you must itemize your deductions to get the tax benefits of donating a car.
- Deduct the fair market value of the vehicle, taking into account the vehicle's condition. The IRS tells taxpayers that fair market value often differs significantly from the value listed in the Kelley Blue Book, a common source for estimating the value of new and used vehicles.
On the Web:
Internal Revenue Service - http://www.irs.gov
Publication 78 Cumulative List of Organizations - http://www.irs.gov/charities/article/0,,id96136,00.html
Publication 526 Charitable Contributions - http://www.irs.gov/pub/irs-pdf/p526.pdf
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